ICAEW.com works better with JavaScript enabled.

When Chartered Accountants Save the World

Four ways that chartered accountants can encourage diversity

Author: ICAEW Insights

Published: 27 Jul 2021

Work and Careers

The case for diversity and inclusion is stronger than ever. From dealing with data to increasing collaboration, we explore four key areas that can drive real progress and value within the workplace and change the future of the profession.

Chartered accountants have a growing role to play in ensuring that the thousands of decisions that senior leaders – whether in business or government – make every day dispel discrimination in all its forms. 

This ranges from some of the more obvious activities – such as ensuring diversity and inclusion data is as accurate and useful as possible – to some where many chartered accountants will feel on less certain ground – such as understanding how some of the core tenets of their profession should be used to challenge the decisions of senior colleagues or clients.

1. Dealing with the different types of data

Data about D&I is different to the financial data that chartered accountants have dealt with their whole careers, argues Natalie Nicholles, a senior director at the Capitals Coalition who is co-leading the Accounting for a Living Wage project in collaboration with Shift, a non-profit organisation that advises on business and human rights. The key lesson is that the context of that data – how it is seen and discussed – is as vital as the data itself, she argues.

Nicholles says, “Whether it’s D&I or living wages, these are really tricky topics in the social and human arena. In natural capital, we’ve done much better at being able to value greenhouse gas emissions and biodiversity loss, even though that’s still difficult to do. But when it comes to people, our accounting models really exclude them; they’re just complete externalities.”

Gina Mills, Director at EY and leader of the firm’s LGBTQ network across Australia and New Zealand, agrees. She has worked with numerous colleagues on a project that supports social enterprises, and says that, for all of the businesses involved in that project, social impact is “their reason for being and it's not all about profit.” But this then means you have to tell another “story in a convincing way to a set of investors or to your bank or whomever. To demonstrate that you may not be making massive amounts of profit, but 'Here's what we're also doing on the side'."

She says that “that's probably something that accountants of the future need to be thinking more about, because it's not always going to be about profit anymore.”

In terms of the data you collect, one size doesn’t fit all, warns Mac Allonge, Founder and CEO of data-driven D&I consultancy The Equal Group. “We advise companies to collect as much data as possible – about representation, experience, progression, talent management – across all aspects of the recruitment process, even the makeup of your supply chain. The wider you can spread the data spoke, the more holistically you can look at things.”

2. Collaborating more effectively – especially with HR

Corporate activity on diversity, equality, inclusion and any other social issues will have traditionally resided within a company’s HR function. Although HR will always have a role to play, other functions and teams will also become more heavily involved as these issues become more important to the overall performance of a company. And Finance will take on a particularly big part here.

Phil Toohey is Chief Operating Officer of uFlexReward, a commercial spin-out from technology developed in-house at Unilever, one of the world leaders in measuring and monitoring social and people issues relating to its operations. From his time working with clients, he says, “It’s not something that HR or Finance can do on their own.” Finance teams “need to broaden their horizons and take in other elements of data,” Toohey adds.

“It is that ability to be able to say, ‘Well, it’s not just the numbers, it’s what the numbers are saying. How comfortable are we in that? What should we present and what shouldn’t we present?’” says Toohey. “It’s a lot more judgemental, and you need to be aware, obviously, of not only the legislation and the guidance but also how that’s perceived across the market.”

3. Being aware of the arguments involved

Investors have become incredibly interested in diversity and inclusion over the past four to five years. Robert Walker, Managing Director and Global Co-Head of Asset Stewardship at State Street Global Advisors, one of the world’s largest asset managers, says, “Human capital and culture are a part of a company’s intangible assets.”

Social issues have “always been viewed as important, but the materiality of those issues – how you measure that – has been in flux”, he says. For Walker, the concept of “human capital in the next few years is going to become very important. It's not going to go away”. 

Walker points out that State Street is already telling its portfolio companies and the wider market that companies with “a good balance of gender and racial equity” will likely have a “lower risk profile”. Firms also need to manage diversity as an “emerging systemic risk”, he says.

4. Future roles

Finally, alongside the technical and collaboration considerations, chartered accountants could also take on a more fundamental task in the more distant future.

Jeremy Nicholls, director, a founder of Social Value International, and an ambassador to the Capitals Coalition, argues that accountants could play a vital role by going back to the core tenets of the profession and applying them to issues of diversity and inclusion. 

He believes that current accounting processes, standards and rules are set up to track, check and ask of management teams whether they are doing the best they can to provide a return for shareholders’ capital – but nothing more than that. 

“Financial accounting says it will produce information for investors to make decisions about providing resources to a company in the expectation of financial returns. Now, that is therefore an expectation of financial returns, and with absolutely no interest in any other consequences.”

This appears increasingly mis-aligned with broader expectations of organisations. As studies have shown, considering performance from a purely financial point of view and missing social and environmental costs and implications may also harm financial returns over the longer-term.

As companies are seen to have obligations beyond just their shareholders, these are debates that will directly impact accountants, and may reshape the profession.

When Chartered Accountants Save the World

Our major content series explores how chartered accountants are helping to tackle some of the most urgent social challenges within the UN Sustainable Development Goals, and considers how the profession could do even more in the future.

Two people in business attire walking outside together